The Appellate Division of the Supreme Court of New York has reversed a lower court’s Order that emails between firm lawyers and their in-house counsel were not protected under attorney-client privilege. The reversal follows a national trend as the highest Courts in Massachusetts, Oregon, and Georgia have also reached similar decisions.

The case involved an employee who hired a firm to negotiate a separation agreement with his former employer.  After consulting with lawyers at the firm, the employee initiated a lawsuit in federal court and instituted arbitration proceedings against the employer. Just prior to the arbitration, the employer advised that they intended to call one of the employer’s attorneys to testify. The attorney had met with in-house counsel regarding his ethical obligations. The employee lost his arbitration and then settled the federal court case for a nominal amount.

Two years later, the employee initiated a legal malpractice action against the firm. During discovery, a firm attorney claimed that discussions in emails between him and in-house counsel were protected under attorney-client privilege. The employee moved to compel production of the emails, which the lower court granted.

The Texas Court of Appeals has reversed a trial court’s Order, granting a law firm and two of their attorneys’ motion to dismiss a legal malpractice action. The Defendants had asserted that Plaintiff’s legal malpractice action was barred by the statute of limitations. While the trial court had not specified its reasons for granting the motion, the Court of Appeals found that the trial court had abused its discretion.

The legal malpractice case arose from a 1992 suit in which several parties had sued the Plaintiff, seeking a declaration of rights regarding a water well. The Defendants in the present legal malpractice action had represented the Plaintiff. Plaintiff lost the case and appealed. During the pendency of his appeal, the Plaintiff filed for bankruptcy. In January, 1998, the Texas Court of Appeals reversed, in part, and remanded.

On July 31, 2002, the Plaintiff filed his legal malpractice action against the Defendants. That suit was subsequently dismissed in July, 2011 for lack of prosecution and final judgment entered on July, 2013. On June 24, 2015, Plaintiff re-filed his legal malpractice claim. The trial court dismissed, assessed sanctions of $8,500 and awarded attorneys’ fees to Defendants, designating the Plaintiff as a “vexatious litigant”.

The Bankruptcy Panel for the Sixth Circuit Court of Appeals has ruled that a bankruptcy judge from the Western District of Tennessee abused his discretion by imposing sanctions in the form of attorney’s fees and expenses related to a debtors’ bankruptcy case and related litigation.

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A Manhattan Acting Supreme Court Justice has granted a motion to dismiss a claim against Skadden, Arps, Slate, Meagher & Flom, after ruling that the claim was time-barred under Oregon’s two-year statute of limitations.

Creditors of a bankrupt conglomerate had sued Skadden, in New York state court, after allegations that Skadden acted unethically in failing to disclose or obtain waivers for multiple conflicts.

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This case involves a company, Henry S. Miller Commercial Company (“HSM”), who set up commercial property transactions by a buyer who claimed to be the beneficiary of a large trust fund. The buyer was in fact a truck driver who had no trust fund. When the deals failed to close, the prospective sellers were forced to liquidate their properties at a loss. They then sued HSM for fraud, and obtained a judgment in the amount of $8.9 million. HSM then sued its insurance carrier when it refused to pay the judgment. HSM eventually settled that action for close to $6 million.

 

HSM also sued its lawyers in the underlying case for legal malpractice and also for gross negligence. HSM asserted that the lawyers were grossly negligence for failing to name the truck driver in the underlying action. The trial judge in the legal malpractice action granted a direct verdict for the lawyers on the gross negligence claim, but permitted the legal malpractice claim to go forward. At trial, a jury found in favor of HSM in the amount of $4.6 million. The judge issued a final judgment with no monetary award, after applying the $6 million paid by the insurer. Both parties appealed.

 

The Fifth Circuit Court of Appeals reversed the directed verdict for the lawyers on gross negligence, and remanded the case for a new trial rejecting all other appellate issues. The Appeals Court found that the truck driver was a person the jury could have considered to be responsible for the unsuccessful real estate transactions, and that the lawyers’ failure to name him may have shifted additional liability on HSM. The court found that it was a factual question whether the lawyers were grossly negligence in failing to bring the truck driver into the case.

Richard Thomas Robol, Esq., who aided in the recovery of treasure from a shipwreck, has been sanctioned by a District Court in Ohio for engaging in bad faith conduct during related litigation. Robol represented Recovery Limited Partnership (“Recovery”), the organization which discovered the wreck of the S.S. Central America, and recovered vast amounts of gold from it.

Through many years of litigation, Robol misrepresented himself to the Court, and apparently aided defendants by concealing gold-sale inventories, which the Court had Ordered his clients to produce. On June 10, 2016, the US Court of Appeals for the Sixth Circuit affirmed the District Court’s ruling, which had imposed sanctions on Robol in the sum of $224,580.

Dispatch Printing Company (“Dispatch”) initially filed the action in 2000, seeking an accounting of the gold recovered from the wreck. Following commencement of the action, the District Court had issued multiple Orders, directing Recovery to produce its financial records from the year 2000. Recovery produced only one inventory from sales to a California gold company in 2000, and claimed it had no other inventories in its possession. Robol repeatedly represented to the Court that there were no other records. More Contempt Orders followed.

The Indiana Court of Appeals has reversed the dismissal of a woman’s malpractice complaint against her attorney, finding that the trial court’s Rule 12(b)(6) Order was improper.

 

Elaine Chenore hired Attorney Robert Plantz in July, 2005 to pursue a claim for money damages against William Knight. Chenore was awarded approximately $11,000 in January, 2006. In December, 2006, Knight filed a Chapter 13 Bankruptcy Petition. Plantz was notified, and collection proceedings were stayed. Although Plantz informed Chenore of the bankruptcy petition, she did not receive notice directly from the Bankruptcy Court. Plantz told her to “wait until notified by the Bankruptcy Court” and that he was going to appear for her there.

 

In July, 2012 Chenore learned that Knight’s bankruptcy had been discharged and that he had paid 100% of the claims filed, but paid her nothing, because no Notice of Claim had been filed on her behalf. Chenore then sued Plantz, who moved to dismiss under Rule 12(B)(6), claiming the two-year statute of limitations for attorney malpractice had expired. Chenore replied that the statute of limitations had been equitably tolled, because Plantz never told her that he did not appear for her in the Bankruptcy Court. The trial court granted Plantz’s motion.

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Creditors of a bankrupt conglomerate have sued Skadden, Arps, Slate, Meagher & Flom in New York state court, after allegations that Skadden acted unethically in failing to disclose or obtain waivers for multiple conflicts. The plaintiffs are lenders and private equity funds owed over $90 million, who forced a company, Evergreen International Aviation Inc., to file for Chapter 7 protection in Delaware state court in late 2013. Jay Goffman, Esq. was also named as a Defendant, who heads Skadden’s corporate restructuring group.

The suit was filed after a Bankruptcy judge in Delaware granted the creditors derivative standing to sue Mr. Goffman and the firm. The suit specifically alleges that Skadden provided a broad scope of legal services to help operate various companies, all of which were controlled by               Delford Smith, a principal of Evergreen International Aviation, Inc., who operated his business empire out of Oregon.

The suit claims that Goffman gave priority attention to Smith’s personal interests at the expense of unrelated creditors. Smith died in 2014. According to the complaint, Smith was “the source of much of Goffman’s success as a business originator.”

The complaint details two “likely fraudulent transfers” in 2013, diverting cash and other assets, which would have been part of the bankrupt estate. First, there was a transfer of two aircraft, valued at $10.6 million, to Evergreen Vintage Aircraft, a non-profit controlled by Smith, apparently without consideration.

Second, in May, 2013, Evergreen International agreed to sell stock of its helicopter subsidiary to Erickson Air-Crane Inc. for $250 million in cash and other consideration. The complaint alleges that Skadden represented five different companies in the sale, including Evergreen International, its helicopter subsidiary, a separate holding company, and Smith.

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The Court of Appeals of the Seventh Circuit of the state of Illinois has affirmed a judgment in Estate of Stanley Cora v. John C. Jahrling. Attorney John Jahrling had represented Stanley Cora in a home sale with knowledge that there was a language barrier. Cora sold his home for $35,000, in spite of an approval showing fair market value was $106,000, and Jahrling also failed to include a requested life estate for Cora, which would have allowed him to reside in the upstairs apartment of the house rent-free for the rest of his life.

During the negations and sale, Jahrling could not communicate directly with Cora because Cora only spoke Polish. Jahrling relied on opposing counsel to communicate with his client. Following an attempt by the buyers to evict Cora from the upstairs apartment, he sued Jahrling for legal malpractice. Cora died in 2006 before trial, but his estate continued to pursue the case.

The Appeals Court ruled that Jahrling had acted as Cora’s attorney, relying on evidence Jahrling had received a payment from another attorney at the closing on the sale of his home. The closing documents also identified Jahrling as Cora’s attorney.

The Appeals Court also determined that Jahrling’s inability to communicate with his client, coupled with his reliance on opposing counsel for all communications was “unreasonable per se” and that the lower court had correctly relied on the discrepancy between the fair market value of the home and the sale price.

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ISSUE:

I was an investor in a ponzi scheme. I lost six figure numbers when the head of the scheme was arrested and jailed and has stated that he spent all his investor’s money playing in high stakes commodities trading. I was referred to this man by my accountant. Do I have any potential claims against this accountant?

INSIGHT: